Today’s silo-oriented IT organizations are ill-suited for adopting Cloud Computing. The traditional structure of application development, operations, technical infrastructure, finance, and help desk has been very effective at centralizing IT and reducing cost, but will need to move closer the business as cloud computing matures.

Organizations have taken large, multi-facetted applications (SAP, Siebel and many others) and implemented modules across different business processes. For example, sales modules may be included with a manufacturing package. Cloud computing will provide alternative solutions where, for example, it may be more effective to utilize a higher function SaaS package to manage sales and channels and provide feeds into centralized manufacturing and distribution systems.

These kinds of decisions dictate that the business accept a higher degree of responsibility for IT, and that choices of applications, infrastructure, and support be pushed down closer to the business.

The most difficult aspect of this IT organizational evolution will be to ensure adequate cross-functional governance, compliance, risk management, and security. These IT functions will need to be strengthened to ensure, for example, that risks taken by one function do not impact the organization as a whole. The meltdown of financial organizations because of lack of central governance and risk-management should provide a salutary example to all.

Action Item: Organizational executive teams will need to take a hard look at current IT organizations and start to move overall responsibility for IT closer to the core business functions. IT should start untangling applications that integrate across business processes. However managing the IT architecture for overall governance, compliance, risk, and security management should remain a strongly centralized function, integrated with key senior business professionals such as the chief security officer.

Comments on 'Cloud computing mandates IT organizational change'

David, Does this mean that the silos need to be eliminated or that as pieces of IT move to the Cloud they shrink both in size and importance, and the CIO needs to become more of a business position and less a technologist and add business staff?